KSLU Solved Question Papers
Financial Accounting
Previous Year Question Paper with Solution
B.B.A. LL.B. (Five Years) · Sem 1
2021 Mar Examination
munotes.in
Mumbai
B.B.A. LL.B. (Five Years) Sem 1 Financial Accounting 2021 Mar Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2021 Mar examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2021 Mar examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2021 Mar examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
(a)Define accounting. Explain the objectives and functions of Accounting.[10]
Answer
For full marks, cover: a definition of accounting (the classic one and the modern one) and its meaning in steps; then the objectives, which say why accounts are kept; then the functions, which say what the accountant actually does; and a short line on how the two differ.
Meaning of accounting
Every business buys, sells, pays and receives money every day. A trader cannot remember hundreds of such dealings. So he writes them down in a fixed, orderly way. That orderly written record, and the work of making sense of it, is accounting.
The classic definition. The American Institute of Certified Public Accountants defined accounting in 1941 as "the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof."
The modern definition. The American Accounting Association, in 1966, called accounting "the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information." The older definition looks at the records. The newer one looks at the people who use them.
Read together, the two definitions give accounting its steps:
- Identifying the transactions that are financial in nature, such as a sale of goods. A worker's strike is not recorded, because it has no money value at that moment.
- Recording each transaction in the journal, in the order of dates.
- Classifying the entries into accounts in the ledger, so that all items of one kind stand together.
- Summarising the accounts in a trial balance and then in the final accounts.
- Analysing and interpreting the results, so that a reader can see the profit and the financial position.
- Communicating the results to the owners, managers, lenders and others who need them.
Objectives of accounting
The objectives answer the question: why do we keep accounts at all?
- To keep a systematic record. Accounting gives a complete and permanent record of every transaction. Memory fails, but the books do not.
- To find the profit or loss. The trading and profit and loss account shows whether the business earned a profit or suffered a loss during the year. This is the main reason a trader keeps books.
- To show the financial position. The balance sheet shows what the business owns (assets) and what it owes (liabilities) on a given date.
- To protect the property of the business. Proper records of cash, stock, debtors and fixed assets make theft, waste and fraud easier to detect.
- To help management decide. Figures of cost, sales and profit help the owner fix prices, cut waste and plan the next year.
- To meet the law. A company must keep books of account on the accrual basis and by the double entry system under section 128 of the Companies Act, 2013. Tax laws and GST also require records.
- To give information to outsiders. Banks, investors, creditors and the tax department rely on accounts before they lend, invest or assess tax.
Functions of accounting
The functions answer a different question: what work does accounting do to reach those objectives?
- Recording function. Every transaction is entered first in the journal or a subsidiary book, such as the cash book or the purchases book. This is book keeping, the base of all accounting.
- Classifying function. The entries are posted to ledger accounts. All transactions with one person, one asset or one kind of expense are brought together in one account.
- Summarising function. The ledger balances are listed in a trial balance. From it the trading account, the profit and loss account and the balance sheet are prepared.
- Analysing function. The figures are broken down and compared. For example, gross profit is compared with sales to find the gross profit ratio.
- Interpreting function. The accountant explains what the figures mean. A falling profit ratio may mean that purchase costs are rising.
- Communicating function. Reports are sent to the users in a form they can understand, on time.
- Legal and protective function. Accounts are kept as the law requires, and they serve as evidence in a dispute or before a tax authority.
Objectives and functions compared
| Point | Objectives | Functions |
|---|---|---|
| Question answered | Why accounts are kept | How the work is done |
| Nature | The ends or goals | The means or activities |
| Examples | Find profit, show position, help decisions | Record, classify, summarise, interpret |
| Order | Fixed in advance by the users' needs | Done step by step every year |
Users who depend on these objectives
The owner wants to know the profit. Managers want cost and sales figures. Creditors and banks want to know whether the business can repay. Investors want to know whether their money is safe and earning. The government needs figures for tax. Employees want to know whether the business is stable. So accounting serves people inside and outside the business.
Conclusion. Accounting is the art of recording, classifying and summarising money transactions and interpreting the results, so that users can make informed decisions. Its objectives are a full record, the profit or loss and the financial position. It also protects assets, helps management, meets the law and informs outsiders. Its functions are recording, classifying, summarising, analysing, interpreting and communicating. The functions are the work done, and the objectives are the purpose that the work serves.
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